Revisions to reported uninsured deposit totals have altered what institutions are expected to pay under a proposal to replenish the Deposit Insurance Fund.

After uninsured deposits came under a microscope following the regional bank failures in the spring, many banks refined their calculations for totaling those deposits, leading to an uptick in downward revisions. Now, following July 24 guidance from the Federal Deposit Insurance Corp. that banks must include intercompany and collateralized deposits in their totals, at least 46 banks revised their fourth-quarter 2022 uninsured deposit numbers. Most have been upward revisions.

Those restatements impact what banks are slated to pay toward the FDIC's proposed special assessment, which is supposed to restore the Deposit Insurance Fund after the failures of Silicon Valley Bank and Signature Bank that occurred earlier this year. Based on reported data as of Aug. 9, US banks are estimated to pay a total of $15.01 billion, down from $15.35 billion when S&P Global Market Intelligence last calculated the industry's special assessment payments on May 19.

Currently, the calculated payments would cover less than the FDIC's cost from the failures of Silicon Valley Bank and Signature Bank, which the agency estimated to be about $15.8 billion. However, that estimate came in the May 11 special assessment rule proposal, and the agency noted that costs could change as assets are sold, liabilities are satisfied and receivership expenses are incurred.

Potentially paying less

Capital One Financial Corp. saw the largest change in its estimated special assessment payment among banks that have restated their fourth-quarter 2022 uninsured deposit data since May 19. The company restated its fourth-quarter 2022 uninsured deposit total to $112.35 billion, down from the previously reported $158.74 billion, dropping its estimated payment by $116 million to $268.4 million.

Other notable restatements that led to declines in estimated special assessment payments included Huntington Bancshares Inc.'s $33.73 billion downward revision of its fourth-quarter 2022 uninsured deposits, leading to an $84.3 million drop in its estimated special assessment payment.

The proposal calls for banks with more than $5 billion in uninsured deposits to pay the special assessment, and some banks have even dropped below that threshold as a result of restatements, including Farmers & Merchants Bank of Long Beach, Washington Federal Inc. and First American Financial Corp.

Farmers & Merchants amended its uninsured deposits after refining its methodology "to arrive at a more accurate number," the company said in a statement to Market Intelligence. It was not due to the exclusion of any certain deposits as the company is in compliance with the FDIC's recent guidance to include intercompany and collateralized deposits, the statement said.

Washington Federal restated its fourth-quarter 2022 uninsured deposits after removing collateralized municipal deposits, but the bank will soon restate that total and its first-quarter total after the FDIC's recent guidance, CFO Kelli Holz said in a statement.

Potentially paying more

Conversely, some banks' revisions have led to higher estimated special assessment payments, such as First Interstate BancSystem Inc., which raised its uninsured deposits by $2.39 billion leading to a $6.0 million increase in the proposed special assessment payment, and Home BancShares Inc., which would pay $4.6 million more after raising its uninsured deposits at Dec. 31, 2022, by $1.85 billion.

Restatements from Columbia Bank, Veritex Community Bank and Community Bank NA brought their uninsured deposit totals above $5 billion, meaning they will need to pay the special assessment if the current proposal is finalized without changes.

Provident Bank is among those that have restated multiple times. Provident initially reported having more than $5 billion in uninsured deposits, but after a restatement in June, the company was below that threshold.

"We had previously just kind of taken a shortcut method and said everything over $250,000 is uninsured without looking deeper into it," Provident Financial Services Inc. CFO Thomas Lyons said in an interview. "But obviously, when there became a penalty for that conservatism around the special assessment that's proposed, we sharpened our pencil and said, 'Can we get a better estimate that's more precise?'"

However, Provident once again found itself above $5 billion in uninsured deposits after it had to restate following the FDIC issuing its guidance to include intercompany and collateralized deposits, Lyons said.

The company hopes the FDIC excludes intercompany and collateralized deposits from the special assessment payment calculation "because it really doesn't make sense to consider those as part of the uninsured total," Lyons said. Excluding those would bring the company's uninsured deposits down to about $3.1 billion, below the $5 billion threshold, he said.

Multiple regional banks expressed similar concerns in comment letters to the FDIC on the proposed special assessment. Senate Banking, Housing and Urban Affairs Committee Chairman Sherrod Brown (D-Ohio) also expressed similar concerns in a letter to FDIC Chairman Martin Gruenberg, asking the agency to exclude collateralized and affiliate deposits from calculations for the special assessment.

– Download S&P Global's projected list of US banks and thrifts that may be subject to the FDIC's special assessment. – Download a template to compare a bank's financials to industry aggregate totals. – Download a template to calculate deposit and loan beta and growth rates.

The biggest payers

The biggest institutions are estimated to cover more than half of the industry's total special assessment under the proposal.

JPMorgan Chase & Co. is still expected to pay the highest special assessment with an estimated payment of $2.56 billion even after a restatement lowered its year-end 2022 uninsured deposit number by $30.70 billion. JPMorgan's restatement was driven by improvements in the company's reference data and classification of certain deposits and does not have a material impact on the company's potential special assessment payment, according to a source familiar with the matter.

The other "Big Four" banks — Bank of America Corp., Wells Fargo & Co. and Citigroup Inc. — are also expected to pay more than $1 billion each with the assessment at $1.95 billion, $1.80 billion and $1.48 billion, respectively.

Concerns about restatements

Legislators and some banks are concerned about the plethora of restatements.

"It is also our understanding that some large banks have already begun to amend their year-end Call Reports to reduce their reported uninsured deposits," Zions Bancorp. NA CFO Paul Burdiss wrote in a comment letter to the FDIC about the proposed special assessment.

In a letter to the FDIC on Aug. 4, Sen. Elizabeth Warren (D-Mass.) and Rep. Katie Porter (D-Calif.) expressed concern about the way banks report uninsured deposits, urging the agency to "crack down" because "we are concerned these banks may be misreporting important information in an effort to reduce their Deposit Insurance Fund assessment," they wrote.